The fat profits to recording companies are at best marginalized by the adoption of digital formats and piracy. When all things seem gloom and doomed, there are still positive things about the whole paradigm shifts.

53M iPods sold in 2007

36% y/y growth in P2P file sharing

25% y/y growth in audio streaming

40% y/y increase in worldwide digital music sales

8% y/y increase in concert sales

So... what's the big deal with the bunch of numbers? People LOVE music and they are willing to pay for consumption.

I don't know what the answer is for this industry. Just like in any other industries, innovations must be experimented and questioned. What I can tell from my small world is that something dramatic needs to happen (for better or worse) and the whole innovations will cost numerous deaths and a few trophies for those who have the "golden" key. And most importantly, the industry as a whole needs to change the mindset of looking at the opportunities, because the good ol' days are indeed over.